Correlation Between Bayview Acquisition and Embecta Corp

Can any of the company-specific risk be diversified away by investing in both Bayview Acquisition and Embecta Corp at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Bayview Acquisition and Embecta Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bayview Acquisition Corp and Embecta Corp, you can compare the effects of market volatilities on Bayview Acquisition and Embecta Corp and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Bayview Acquisition with a short position of Embecta Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bayview Acquisition and Embecta Corp.

Diversification Opportunities for Bayview Acquisition and Embecta Corp

0.3

Correlation Coefficient

Bayview Acquisition  Embecta Corp

Weak diversification

The 3 months correlation between Bayview and Embecta is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Bayview Acquisition Corp and Embecta Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Embecta Corp and Bayview Acquisition is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Bayview Acquisition Corp are associated (or correlated) with Embecta Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Embecta Corp has no effect on the direction of Bayview Acquisition i.e., Bayview Acquisition and Embecta Corp go up and down completely randomly.

Pair Corralation between Bayview Acquisition and Embecta Corp

Assuming the 90 days horizon Bayview Acquisition Corp is expected to generate 3.5 times more return on investment than Embecta Corp. However, Bayview Acquisition is 3.5 times more volatile than Embecta Corp. It trades about 0.16 of its potential returns per unit of risk. Embecta Corp is currently generating about -0.26 per unit of risk. If you would invest  15.00  in Bayview Acquisition Corp on December 29, 2024 and sell it today you would earn a total of  6.00  from holding Bayview Acquisition Corp or generate 40.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	47.54%
Values	Daily Returns

Bayview Acquisition Corp  vs.  Embecta Corp

Bayview Acquisition Corp

Risk-Adjusted Performance

Good

Over the last 90 days Bayview Acquisition Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively fragile basic indicators, Bayview Acquisition reported solid returns over the last few months and may actually be approaching a breakup point.

Embecta Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Embecta Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental drivers remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Bayview Acquisition and Embecta Corp

The main advantage of trading using opposite Bayview Acquisition and Embecta Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bayview Acquisition position performs unexpectedly, Embecta Corp can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Embecta Corp will offset losses from the drop in Embecta Corp's long position.

The idea behind Bayview Acquisition Corp and Embecta Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.